The initial months of 2021 were not favorable for automakers. Semiconductor shortages derailed the post-COVID recovery, affecting vehicle sales worldwide. But the shortages have eased a bit one year later and auto sales are reviving. Automakers expect to recover the losses made during the last two years, soon. However, traditional automakers are unable to cope with the rising demand for pure EVs, whereas Tesla’s ability to address this demand has rewarded it not only with higher vehicle sales in Q1 2022 but also a record revenue of $18.8 billion. Tesla has also started deliveries to car rental service provider Hertz against its huge 100,000-vehicle order, which is also a reason for high vehicle production and delivery during the quarter.
Tesla’s Q1 2022 revenue would have been more without the fresh COVID wave that has hit Shanghai and surrounding areas, affecting the company’s production there. From the second week of March, rising cases of a new COVID variant have forced automakers operating around Shanghai to suspend production.
The urge to achieve L4 autonomy by the end of 2023 and to roll out robotaxis by early 2025 can be a major reason for Tesla’s big R&D spend. Besides, Tesla could also be conducting research on developing new battery chemistry. The soaring prices of some key battery components like nickel and lithium have put the auto OEMs in a spot. Most EV makers around the globe have been forced to raise prices by a few thousand dollars to cope with the rising prices of battery-related raw materials.
After Tesla’s Shanghai plant became operational, the company’s sales boomed globally, especially in China. In 2021, China remained its top market followed by the US and Europe. Apart from vehicle sales, Tesla has a strong network of charging stations and insurance services. Till Q1 2022, Tesla had 3,724 superchargers and 33,657 supercharger connectors worldwide.
Tesla’s future seems strong as it never stops innovating and keeps providing better and newer features to its customers. But within a couple of years, Tesla will face strong competition from traditional OEMs like Volkswagen, Toyota and Stellantis, which released their ambitious vehicle electrification plans last year. Though it will be difficult for them to overtake Tesla sales any time soon, Tesla will witness a reduction in its share across major markets. The reason behind this is the price band in which Tesla operates. It mostly operates in the high-to-premium price band, whereas the traditional OEMs are planning to launch vehicles in the budget segment. The rising cost of a few key raw materials and inflationary impact on production have pushed Tesla to increase its vehicle prices worldwide a couple of times. This might play against the sentiment of new customers, which will, in turn, affect the next quarter’s financials.
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